CME Group CEO to retire

CME Group CEO Phupinder Gill will retire at the end of the year, handing his title to Executive Chairman Terry Duffy in an unexpected move at the world's largest futures exchange operator.

The Chicago-based company made the announcement in a statement late today. Gill, 56, became CEO in May 2012 after former CEO Craig Donohue left following the collapse of a major CME client, MF Global, that shook the company in 2011.

CME provided little explanation for Gill's departure other than a quote from him in the statement saying “it is the right time for me to retire.” The statement said there weren't any strategic changes in the offing.

“Gill's retirement comes as a bit of a surprise, as he had been with the company since 1988, and just last year had his employment contract extended through December 31, 2019,” Keefe Bruyette & Woods analyst Kyle Voigt said in a research note. Voigt didn't anticipate the stock would react much to the news because CME has a “deep bench” of executives.

Bryan Durkin, who is currently chief commercial officer, will become president of CME, the statement said. CME Spokeswoman Laurie Bischel said there weren't any other senior executive changes.

"Phupinder Gill has dedicated the majority of his career to the futures industry, and has played a valuable role in helping CME achieve dynamic global expansion, developing a strong growth strategy, creating a strategic sales team structure and establishing a customer-focused orientation across the organization," Duffy said in the statement. "Going forward, our strategy remains unchanged."

Bischel said that in light of the accomplishments enumerated in the statement, Gill was ready to leave. Gill will also exit his post on CME's board of directors. Bischel said he and Duffy weren't available for interviews.

“It is the right time for me to retire, and I am confident that Terry, Bryan, and the management team, along with the entire staff of CME, will continue to further advance our strategy and lead the company into the future," Gill said in the statement.

Duffy, 58, is a former pit trader who segued to executive roles at the company more than a decade ago after serving on the exchange's board before it became a publicly traded company in 2002. He became executive chairman in 2006 just before the company embarked on an acquisition spree that included buying the rival Chicago Board of Trade in 2007 and merging it with the Chicago Mercantile Exchange.

Gill's story was an unlikely one. He was born in Malaysia to parents of Indian descent and moved to the U.S. to go to college at Washington State University. He joined the Chicago Mercantile Exchange in 1988 and rose through its clearing division ranks to become president of the company in 2007. He has overseen major shifts in the industry in recent years as the Dodd-Frank Wall Street Reform and Consumer Protection Act increased regulation of the financial markets and pushed more trading onto exchange platforms.

“I think he's done an honorable job, but I don't think CME is going to miss a step as Terry Duffy steps in,” said Richard Repetto, an analyst at Sandler O'Neill in New York.

The CME announcement comes a day after the election of Donald Trump as president of the United States spurred a spike in trading across financial markets and led to a CME record for trading volume in a single day as traders reacted to the historic political upset.

CME's stock has been climbing too, and shot up over the past week to close at a 52-week high of $117.05 today. That may be a result of the market anticipating Trump's threatened plan to dismantle the Dodd-Frank law and cut back regulation in the industry.